All Eyes On OPEC As Oil Prices Sink
Greetings from London.
Oil prices have been falling throughout the week, hitting a 10-month low on Wednesday, but Friday trading has seen a slight recovery.
Urgent: Before we take a look at this week’s data, we would like to inform you that we've just published a special report on a breakthrough technology in solar. This report along with several other reports will turn you into an expert in the rapidly growing and dynamic solar power industry. Find out how you can consistently make money from investing in renewable energy. This report is exclusively available to our Energy & Resource Insider members - We have temporarily extended our $49 per year offer for this service. Click here to find out more.
Friday, June 23, 2017
Oil prices hit ten-month lows this week, pushing crude oil well into bear market territory. Hopes of the OPEC deal balancing the market are fading fast. The plunging price took a breather on Thursday and Friday, hovering at the lowest levels since the third quarter of 2016.
Deeper OPEC cuts? There is a growing consensus that the OPEC cuts won’t be enough to drain inventories, so there are murmurings about the possibility of deeper cuts. Iran’s oil minister suggested the idea on state radio earlier this week. But that seems like a remote possibility at this point. Russia has previously dismissed the idea, and very few other producers have shown any interest. The prospect of deeper cuts would help prices but also cede even more OPEC market share to rival drillers. As a result, OPEC is likely to let the market sort itself out for the time being. Meanwhile, the head of Macquarie predicts that the agreement will expire and fall apart at the end of the compliance period in March 2018. "We actually see this OPEC agreement breaking up towards the middle of next year. In that case, we're going to see a huge amount of extra oil on the market next year," Macquarie’s head of European oil and gas research, Ian Reid warned.
Sub-$40 oil is “problematic.” Oil prices falling to the low-$40s has raised a number of questions about the viability of U.S. shale below the $40 threshold. Mathew Kaleel of Janus Henderson told CNBC that shale production below $40 per barrel is “problematic,” and that a lot of it would be “loss-making.” Other analysts agreed with that sentiment, while also predicting that there is a good chance prices dip below the $40 threshold soon. At the same time, Kaleel noted that prices would have to move higher in the medium-term to encourage more production.
Saudi royal succession shakeup. Saudi Arabia’s deputy crown prince Mohammed bin Salman was promoted to crown prince this week, a move that puts the 31-year-old on track to become the youngest king in the country’s history. The succession reshuffling will have implications for the oil markets. The new crown prince is hawkish towards regional rivals such as Iran and Qatar, so conflict could escalate. But he is also spearheading an economic modernization campaign, the centerpiece of which is the partial IPO of Saudi Aramco. That necessitates higher oil prices, so it is unlikely that Saudi Arabia wants to see oil prices stay low for too long.
Qatar crisis continues. Saudi Arabia and several of its allies sent a list of demandsto Qatar, calling for the closure of the Qatari Al Jazeera TV network, along with the closure of a Turkish military base in Qatar. The demands, analysts say, are impossible for Qatar to agree to. As such, the boycott and blockade of the country is likely to continue.
Nigerian exemption to OPEC cuts in jeopardy. Along with Libya, Nigeria has been exempted from the OPEC production cuts due to the large volume of oil that was disrupted from militant attacks on pipelines and other infrastructure. Now, Nigeria is restoring output quickly, having ramped up to 1.73 million barrels per day (mb/d) in May, up from a low of 1.2 mb/d last year. After Royal Dutch Shell (NYSE: RDS.A)lifted the force majeure on its Forcados export terminal just a few weeks ago, more gains from Nigeria are expected. Platts estimates Nigerian production will rise to 2 mb/d by August. If that occurs, and output appears to be sustainable, Nigeria’s exemption could be scrapped at a future OPEC meeting, analysts say.
Natural gas prices could rise. With record levels of U.S. natural gas exports, along with stagnant production, the two-year glut of natural gas supply could dissipate later this year. Heading into the winter heating season, natural gas inventories might actually dip below the five-year average, according to Bloomberg. "If we have low inventory and a normal winter, that basically sets up the stage for a bullish market in 2018," said Tai Liu, an analyst at Bloomberg New Energy Finance.
U.S Northeast oversupplied with gasoline. The Colonial Pipeline, a major artery that transports gasoline from the U.S. Gulf Coast to the mid-Atlantic and Northeast, is running below capacity, according to Reuters. Its operator says that supplies in the northeast are flush, leading to the lowest level of demand for the pipeline in six years. The pipeline ran below capacity for five days, the longest stretch since 2011. Typically, demand exceeds supply, forcing East Coast and Northeast refiners to import extra supplies to satiate demand. The unusually high levels of gasoline inventories is a bearish sign that the market is oversupplied.
Floating storage signals glut persists, but also some optimism. The recent uptick in floating storage is a sign that the oil market remains oversupplied. Costly storage on tankers tends to occur only in a depressed oil market. But RBC Capital Markets looks at the bright side of things, arguing that floating storage is occurring because traders think that oil prices will rise. The cost of storing oil at sea “becomes negligible if spot prices rally,” RBC wrote in a note.
Tropical storm knocks Gulf of Mexico production offline. About 39 production platforms in the Gulf of Mexico were evacuated as Tropical Storm Cindy made its way through the region. The storm shut in about one-sixth of the Gulf of Mexico’s total production, and a natural gas gathering system offshore had to declare force majeure. JBS Energy says that about 300,000 bpd of oil production have been affected.
In our Numbers Report, we take a look at some of the most important metrics and indicators in the world of energy from the past week. Find out more by clicking here.
Thanks for reading and we’ll see you next week.
Best Regards,
Tom Kool
Editor, Oilprice.com
P.S. – In this weeks Numbers Report, we take a look at the impact of lower prices on U.S. shale, with several companies being push to their breaking point despite record low breakeven prices. Find out where the tipping point is for U.S. shale production by claiming your 30 day risk-free trial on Oil & Energy Insider
What's in Oil & Energy Premium this week:
Inside Investor
• What To Do As Oil Prices Plunge?
Inside Opportunities:
• SPR Selloff Hits The Markets At The Worst Time Possible
Executive Report:
• Will Shale Keep Booming At Low Oil Prices?
Inside Markets:
• Are We About To See A Short Covering Rally In Oil?
Inside Intelligence:
• Global Energy Advisory - 23rd June 2017
Global Energy Advisory - 23rd June 2017
Mexico awarded 10 of the 15 oil and gas offshore blocks it tendered this week, with the results of the tender exceeding expectations amid increasingly weak oil prices. Winners included Italy’s Eni, Shell, Total, Spanish Repsol, Lukoil, and Ecopetrol, as well as local major Pemex.
The Italian oil and gas giant was the biggest winner, securing licenses for the development of three blocks, two of them in partnership with a Mexican independent, Citla Energy, and one together with a unit of Cairn Energy. Colombia’s Ecopetrol won the licenses to two blocks, in partnership with Pemex on one, and with Malaysian Petronas on another. Shell and Total jointly won the license for another block, and Russian Lukoil was awarded one block. Repsol was awarded a block in partnership with Mexican Sierra Oil & Gas, while Pemex partnered on another block with German DEA Deutsche Erdoel.
According to Mexico’s Energy Minister, the combined output from the blocks could reach 170,000 bpd. Mexico’s total for this year is planned at 1.944 million bpd. Crude oil production in the country has been falling steadily over the last 12 years due to falling investments and depleting fields. Without any new significant finds, Mexico’s current reserves would only last for 9 years, according to the local oil and gas regulator, which makes new tenders rather urgent.
Because of its rather precarious situation with oil reserves, Mexico has been unwilling to join OPEC’s efforts to prop up falling international oil prices although it did hail them. This makes the outcome from this latest tender all the more important, suggesting international and state oil companies still have appetite for investment despite the falling prices. Total investments in the ten blocks could reach $8.2 billion throughout their productive lives.
Deals, Mergers & Acquisitions
• Occidental Petroleum is selling non-core assets in the Permian, hoping to pocket some $600 million. The land for sale is 13,000 acres. At the same time, Occidental will increase its core acreage in the star basin, including raising its interest in a CO2 enhanced oil recovery project. The value of the EOR deal is also $600 million, and the seller is Hess.
• EQT Corp. has agreed to buy the Marcellus shale gas assets of Rice Energy for $6.7 billion. This will make EQT the largest natural gas producers in the U.S. The cash-and-share deal also includes EQT assuming some $1.5 billion of Rice Energy’s net debt plus preferred shares. Over the first quarter of this year, the combined gas output of EQT and Rice Energy stood at 3.1 billion cubic ft. daily.
• Australia’s Woodside Petroleum announced that the Energy Minister of Senegal has confirmed its right to operatorship of the SNE offshore oil and gas project, after it bought a 35% interest in the project from previous operator ConocoPhillips. Another shareholder in the project, FAR Ltd., had contested Woodside’s rights to assume operatorship, arguing it should have had pre-emptive rights to the purchase of the Conoco stake.
Tenders, Auctions & Contracts
• Eni and the National Iranian Oil Company signed a preliminary agreement for feasibility studies at two fields – the Kish gas field and the third phase of the Darkhovin oil field. The Italian company has six months to present the results of the feasibility studies. The Kish field has reserves estimated at 66 trillion cubic ft. of natural gas, which makes it the fifth-largest offshore gas field in the world. The Darkhovin field is estimated to have in-place reserves of more than 5 billion barrels of crude.
• The tender for Iran’s giant Azadegan field has been delayed for several months to give interested companies enough time to study the deposit. Azadegan, which Iran shares with Iraq, holds some 37 billion barrels of oil on the Iranian side. The tender was first launched at the end of May but no results from it were announced. The bidders for the field’s development include Japan’s Inpex, French Total, and Malaysia’s state-owned energy major Petronas.
Discovery & Development
• BP and Reliance Industries will jointly invest $6 billion in the development of new offshore gas fields that will cut India’s reliance on imports by a tenth. As part of their deal, Reliance and BP will also cooperate on fuel trading, as well as carbon emissions trading.
• Exxon, Hess Corp., and CNOOC will pour $4.4 billion into the development of their jointly operated Liza oil field off the coast of Guyana. A senior Exxon executive noted the field’s low production costs, which determined the company’s and its partners’ decision to accelerate its development. The first phase of Liza will see daily production of 120,000 barrels starting in 2020. This phase will unlock 450 million barrels in oil reserves from 17 wells.
• French Total has committed $1 billion to the development of the giant South Pars gas field offshore Iran after Washington extended a sanctions waiver that had made the French major delay its decision on the project. South Pars is now awaiting its 11th phase of development that has been estimated to cost a total of $5 billion, although Total’s estimate puts the price tag at below $3 billion. It is the biggest Iranian gas field, with reserves of 14 trillion cu m of gas, accounting for 40% of the country’s gas reserves, and 7.5% of the global total.
• Exxon, in partnership with Synthetic Genomics, has announced a breakthrough in a project for extracting oil from algae. Algae are considered a theoretically viable source of biofuel but extracting sufficient amounts of oil without limiting their growth has proved to be a challenge. Now, according to the two companies, this challenge has been overcome: Synthetic Genomics has managed to boost the oil content of a species of algae to over 40% from 20% without affecting its growth rate, which makes it potentially viable commercially.
• Nigeria plans to export more than 2 million bpd of oil in August thanks to the reopening of the Forcados terminal and also due to delays in July loadings of Nigeria’s three main blends. At 2.02 million bpd, August loadings will be the highest since March last year and are bound to weigh on crude oil prices internationally.
Regulatory Updates
• A group of 11 large companies, among them Exxon, BP, Shell, and Total, have declared their support for a proposal to impose a carbon tax on U.S. businesses as a means of combating climate change. The group, which also has backing from prominent figures such as Stephen Hawking, Michael Bloomberg, and Walmart’s Rob Walton, joined the Climate Leadership Council, set up in February this year, as founding members.
• The U.S. Supreme Court upheld a New York court decision to not impose a fine of $8.6 billion on Chevron following allegations of oil pollution in Ecuador. The plaintiffs in the case, a group of Ecuadorian villagers, were represented by attorney Steven Donziger, who was found by the appeals court to have engaged, with his team, in a “parade of corrupt actions”, including offering half a million dollars to an Ecuadorian judge to present a ghostwritten opinion as his own. After the New York court ruled in favor of Chevron, Donziger took the case to an Ecuadorian court, which in turn ordered Chevron to pay up. The company then appealed the ruling at the Supreme Court.
Politics, Geopolitics & Conflict
• Saudi Arabia’s King Salman has named his son Mohammed bin Salman as the Crown Prince, replacing his nephew Mohammed bin Nayef. The move reverberated around the world as it overturns the traditional succession process of the Saudi royal family. Mohammed bin Salman is already the second most powerful man in Saudi politics, the driver behind the Vision 2030 economic diversification program and also the spearhead of the Saudi-led military intervention in neighbor Yemen.
• Ethiopia’s Oromia state is planning to set up a private oil company as part of efforts to stabilize the political environment – the state has seen a string of anti-government protests over the last two years. The company, Oromia Petroleum Share Co., will compete with state-owned National Oil Ethiopia.
• Papua New Guinea will hold general elections over the next two weeks with expectations that the incumbent PM, Peter O’Neill, will keep his seat. Securing a parliamentary majority for his party, however, is uncertain. This could deepen the volatility of the gas-rich country further – volatility caused by excessive government spending and dangerously low foreign exchange reserves.
• A U.S. Senate bill on the extension of anti-Russian sanctions has sparked anger in Germany and Austria, as it targets, among other things, the Nord Stream 2 project, in which German and Austrian energy firms hold significant interests.
• The Philippines, Malaysia, and Indonesia have joined forces to fight back against rising militant activity in the three countries from a group affiliated with the Islamic State. The three neighbors said they will work together to stop the movement of militants, the flow of weapons, and the spread of extremist propaganda in the region.
Pennsylvania Avenue, Washington DC, 20008
admin@oilprice.com
Follow us
Copyright 2014 OilPrice.com. All rights reserved. No part of this report may be reproduced on any electronic medium without written permission from the publisher. Information herein is obtained from sources thought to be reliable, but we can not promise its accuracy.
www.fotavgeia.blogspot.com
Greetings from London.
Oil prices have been falling throughout the week, hitting a 10-month low on Wednesday, but Friday trading has seen a slight recovery.
Urgent: Before we take a look at this week’s data, we would like to inform you that we've just published a special report on a breakthrough technology in solar. This report along with several other reports will turn you into an expert in the rapidly growing and dynamic solar power industry. Find out how you can consistently make money from investing in renewable energy. This report is exclusively available to our Energy & Resource Insider members - We have temporarily extended our $49 per year offer for this service. Click here to find out more.
Friday, June 23, 2017
Oil prices hit ten-month lows this week, pushing crude oil well into bear market territory. Hopes of the OPEC deal balancing the market are fading fast. The plunging price took a breather on Thursday and Friday, hovering at the lowest levels since the third quarter of 2016.
Deeper OPEC cuts? There is a growing consensus that the OPEC cuts won’t be enough to drain inventories, so there are murmurings about the possibility of deeper cuts. Iran’s oil minister suggested the idea on state radio earlier this week. But that seems like a remote possibility at this point. Russia has previously dismissed the idea, and very few other producers have shown any interest. The prospect of deeper cuts would help prices but also cede even more OPEC market share to rival drillers. As a result, OPEC is likely to let the market sort itself out for the time being. Meanwhile, the head of Macquarie predicts that the agreement will expire and fall apart at the end of the compliance period in March 2018. "We actually see this OPEC agreement breaking up towards the middle of next year. In that case, we're going to see a huge amount of extra oil on the market next year," Macquarie’s head of European oil and gas research, Ian Reid warned.
Sub-$40 oil is “problematic.” Oil prices falling to the low-$40s has raised a number of questions about the viability of U.S. shale below the $40 threshold. Mathew Kaleel of Janus Henderson told CNBC that shale production below $40 per barrel is “problematic,” and that a lot of it would be “loss-making.” Other analysts agreed with that sentiment, while also predicting that there is a good chance prices dip below the $40 threshold soon. At the same time, Kaleel noted that prices would have to move higher in the medium-term to encourage more production.
Saudi royal succession shakeup. Saudi Arabia’s deputy crown prince Mohammed bin Salman was promoted to crown prince this week, a move that puts the 31-year-old on track to become the youngest king in the country’s history. The succession reshuffling will have implications for the oil markets. The new crown prince is hawkish towards regional rivals such as Iran and Qatar, so conflict could escalate. But he is also spearheading an economic modernization campaign, the centerpiece of which is the partial IPO of Saudi Aramco. That necessitates higher oil prices, so it is unlikely that Saudi Arabia wants to see oil prices stay low for too long.
Qatar crisis continues. Saudi Arabia and several of its allies sent a list of demandsto Qatar, calling for the closure of the Qatari Al Jazeera TV network, along with the closure of a Turkish military base in Qatar. The demands, analysts say, are impossible for Qatar to agree to. As such, the boycott and blockade of the country is likely to continue.
Nigerian exemption to OPEC cuts in jeopardy. Along with Libya, Nigeria has been exempted from the OPEC production cuts due to the large volume of oil that was disrupted from militant attacks on pipelines and other infrastructure. Now, Nigeria is restoring output quickly, having ramped up to 1.73 million barrels per day (mb/d) in May, up from a low of 1.2 mb/d last year. After Royal Dutch Shell (NYSE: RDS.A)lifted the force majeure on its Forcados export terminal just a few weeks ago, more gains from Nigeria are expected. Platts estimates Nigerian production will rise to 2 mb/d by August. If that occurs, and output appears to be sustainable, Nigeria’s exemption could be scrapped at a future OPEC meeting, analysts say.
Natural gas prices could rise. With record levels of U.S. natural gas exports, along with stagnant production, the two-year glut of natural gas supply could dissipate later this year. Heading into the winter heating season, natural gas inventories might actually dip below the five-year average, according to Bloomberg. "If we have low inventory and a normal winter, that basically sets up the stage for a bullish market in 2018," said Tai Liu, an analyst at Bloomberg New Energy Finance.
U.S Northeast oversupplied with gasoline. The Colonial Pipeline, a major artery that transports gasoline from the U.S. Gulf Coast to the mid-Atlantic and Northeast, is running below capacity, according to Reuters. Its operator says that supplies in the northeast are flush, leading to the lowest level of demand for the pipeline in six years. The pipeline ran below capacity for five days, the longest stretch since 2011. Typically, demand exceeds supply, forcing East Coast and Northeast refiners to import extra supplies to satiate demand. The unusually high levels of gasoline inventories is a bearish sign that the market is oversupplied.
Floating storage signals glut persists, but also some optimism. The recent uptick in floating storage is a sign that the oil market remains oversupplied. Costly storage on tankers tends to occur only in a depressed oil market. But RBC Capital Markets looks at the bright side of things, arguing that floating storage is occurring because traders think that oil prices will rise. The cost of storing oil at sea “becomes negligible if spot prices rally,” RBC wrote in a note.
Tropical storm knocks Gulf of Mexico production offline. About 39 production platforms in the Gulf of Mexico were evacuated as Tropical Storm Cindy made its way through the region. The storm shut in about one-sixth of the Gulf of Mexico’s total production, and a natural gas gathering system offshore had to declare force majeure. JBS Energy says that about 300,000 bpd of oil production have been affected.
In our Numbers Report, we take a look at some of the most important metrics and indicators in the world of energy from the past week. Find out more by clicking here.
Thanks for reading and we’ll see you next week.
Best Regards,
Tom Kool
Editor, Oilprice.com
P.S. – In this weeks Numbers Report, we take a look at the impact of lower prices on U.S. shale, with several companies being push to their breaking point despite record low breakeven prices. Find out where the tipping point is for U.S. shale production by claiming your 30 day risk-free trial on Oil & Energy Insider
What's in Oil & Energy Premium this week:
Inside Investor
• What To Do As Oil Prices Plunge?
Inside Opportunities:
• SPR Selloff Hits The Markets At The Worst Time Possible
Executive Report:
• Will Shale Keep Booming At Low Oil Prices?
Inside Markets:
• Are We About To See A Short Covering Rally In Oil?
Inside Intelligence:
• Global Energy Advisory - 23rd June 2017
Global Energy Advisory - 23rd June 2017
Mexico awarded 10 of the 15 oil and gas offshore blocks it tendered this week, with the results of the tender exceeding expectations amid increasingly weak oil prices. Winners included Italy’s Eni, Shell, Total, Spanish Repsol, Lukoil, and Ecopetrol, as well as local major Pemex.
The Italian oil and gas giant was the biggest winner, securing licenses for the development of three blocks, two of them in partnership with a Mexican independent, Citla Energy, and one together with a unit of Cairn Energy. Colombia’s Ecopetrol won the licenses to two blocks, in partnership with Pemex on one, and with Malaysian Petronas on another. Shell and Total jointly won the license for another block, and Russian Lukoil was awarded one block. Repsol was awarded a block in partnership with Mexican Sierra Oil & Gas, while Pemex partnered on another block with German DEA Deutsche Erdoel.
According to Mexico’s Energy Minister, the combined output from the blocks could reach 170,000 bpd. Mexico’s total for this year is planned at 1.944 million bpd. Crude oil production in the country has been falling steadily over the last 12 years due to falling investments and depleting fields. Without any new significant finds, Mexico’s current reserves would only last for 9 years, according to the local oil and gas regulator, which makes new tenders rather urgent.
Because of its rather precarious situation with oil reserves, Mexico has been unwilling to join OPEC’s efforts to prop up falling international oil prices although it did hail them. This makes the outcome from this latest tender all the more important, suggesting international and state oil companies still have appetite for investment despite the falling prices. Total investments in the ten blocks could reach $8.2 billion throughout their productive lives.
Deals, Mergers & Acquisitions
• Occidental Petroleum is selling non-core assets in the Permian, hoping to pocket some $600 million. The land for sale is 13,000 acres. At the same time, Occidental will increase its core acreage in the star basin, including raising its interest in a CO2 enhanced oil recovery project. The value of the EOR deal is also $600 million, and the seller is Hess.
• EQT Corp. has agreed to buy the Marcellus shale gas assets of Rice Energy for $6.7 billion. This will make EQT the largest natural gas producers in the U.S. The cash-and-share deal also includes EQT assuming some $1.5 billion of Rice Energy’s net debt plus preferred shares. Over the first quarter of this year, the combined gas output of EQT and Rice Energy stood at 3.1 billion cubic ft. daily.
• Australia’s Woodside Petroleum announced that the Energy Minister of Senegal has confirmed its right to operatorship of the SNE offshore oil and gas project, after it bought a 35% interest in the project from previous operator ConocoPhillips. Another shareholder in the project, FAR Ltd., had contested Woodside’s rights to assume operatorship, arguing it should have had pre-emptive rights to the purchase of the Conoco stake.
Tenders, Auctions & Contracts
• Eni and the National Iranian Oil Company signed a preliminary agreement for feasibility studies at two fields – the Kish gas field and the third phase of the Darkhovin oil field. The Italian company has six months to present the results of the feasibility studies. The Kish field has reserves estimated at 66 trillion cubic ft. of natural gas, which makes it the fifth-largest offshore gas field in the world. The Darkhovin field is estimated to have in-place reserves of more than 5 billion barrels of crude.
• The tender for Iran’s giant Azadegan field has been delayed for several months to give interested companies enough time to study the deposit. Azadegan, which Iran shares with Iraq, holds some 37 billion barrels of oil on the Iranian side. The tender was first launched at the end of May but no results from it were announced. The bidders for the field’s development include Japan’s Inpex, French Total, and Malaysia’s state-owned energy major Petronas.
Discovery & Development
• BP and Reliance Industries will jointly invest $6 billion in the development of new offshore gas fields that will cut India’s reliance on imports by a tenth. As part of their deal, Reliance and BP will also cooperate on fuel trading, as well as carbon emissions trading.
• Exxon, Hess Corp., and CNOOC will pour $4.4 billion into the development of their jointly operated Liza oil field off the coast of Guyana. A senior Exxon executive noted the field’s low production costs, which determined the company’s and its partners’ decision to accelerate its development. The first phase of Liza will see daily production of 120,000 barrels starting in 2020. This phase will unlock 450 million barrels in oil reserves from 17 wells.
• French Total has committed $1 billion to the development of the giant South Pars gas field offshore Iran after Washington extended a sanctions waiver that had made the French major delay its decision on the project. South Pars is now awaiting its 11th phase of development that has been estimated to cost a total of $5 billion, although Total’s estimate puts the price tag at below $3 billion. It is the biggest Iranian gas field, with reserves of 14 trillion cu m of gas, accounting for 40% of the country’s gas reserves, and 7.5% of the global total.
• Exxon, in partnership with Synthetic Genomics, has announced a breakthrough in a project for extracting oil from algae. Algae are considered a theoretically viable source of biofuel but extracting sufficient amounts of oil without limiting their growth has proved to be a challenge. Now, according to the two companies, this challenge has been overcome: Synthetic Genomics has managed to boost the oil content of a species of algae to over 40% from 20% without affecting its growth rate, which makes it potentially viable commercially.
• Nigeria plans to export more than 2 million bpd of oil in August thanks to the reopening of the Forcados terminal and also due to delays in July loadings of Nigeria’s three main blends. At 2.02 million bpd, August loadings will be the highest since March last year and are bound to weigh on crude oil prices internationally.
Regulatory Updates
• A group of 11 large companies, among them Exxon, BP, Shell, and Total, have declared their support for a proposal to impose a carbon tax on U.S. businesses as a means of combating climate change. The group, which also has backing from prominent figures such as Stephen Hawking, Michael Bloomberg, and Walmart’s Rob Walton, joined the Climate Leadership Council, set up in February this year, as founding members.
• The U.S. Supreme Court upheld a New York court decision to not impose a fine of $8.6 billion on Chevron following allegations of oil pollution in Ecuador. The plaintiffs in the case, a group of Ecuadorian villagers, were represented by attorney Steven Donziger, who was found by the appeals court to have engaged, with his team, in a “parade of corrupt actions”, including offering half a million dollars to an Ecuadorian judge to present a ghostwritten opinion as his own. After the New York court ruled in favor of Chevron, Donziger took the case to an Ecuadorian court, which in turn ordered Chevron to pay up. The company then appealed the ruling at the Supreme Court.
Politics, Geopolitics & Conflict
• Saudi Arabia’s King Salman has named his son Mohammed bin Salman as the Crown Prince, replacing his nephew Mohammed bin Nayef. The move reverberated around the world as it overturns the traditional succession process of the Saudi royal family. Mohammed bin Salman is already the second most powerful man in Saudi politics, the driver behind the Vision 2030 economic diversification program and also the spearhead of the Saudi-led military intervention in neighbor Yemen.
• Ethiopia’s Oromia state is planning to set up a private oil company as part of efforts to stabilize the political environment – the state has seen a string of anti-government protests over the last two years. The company, Oromia Petroleum Share Co., will compete with state-owned National Oil Ethiopia.
• Papua New Guinea will hold general elections over the next two weeks with expectations that the incumbent PM, Peter O’Neill, will keep his seat. Securing a parliamentary majority for his party, however, is uncertain. This could deepen the volatility of the gas-rich country further – volatility caused by excessive government spending and dangerously low foreign exchange reserves.
• A U.S. Senate bill on the extension of anti-Russian sanctions has sparked anger in Germany and Austria, as it targets, among other things, the Nord Stream 2 project, in which German and Austrian energy firms hold significant interests.
• The Philippines, Malaysia, and Indonesia have joined forces to fight back against rising militant activity in the three countries from a group affiliated with the Islamic State. The three neighbors said they will work together to stop the movement of militants, the flow of weapons, and the spread of extremist propaganda in the region.
Pennsylvania Avenue, Washington DC, 20008
admin@oilprice.com
Follow us
Copyright 2014 OilPrice.com. All rights reserved. No part of this report may be reproduced on any electronic medium without written permission from the publisher. Information herein is obtained from sources thought to be reliable, but we can not promise its accuracy.
www.fotavgeia.blogspot.com
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